IRS reports on backlog of unprocessed returns

A large number of errors made by taxpayers is hurting the IRS with its inventory of unprocessed tax returns. The backlog is mostly paper-filed returns and is dominated by errors relating to Economic Impact Payments (EIPs). On more than 10 million returns filed in 2021, taxpayers “failed to properly reconcile” the two 2020 EIPs with […]

Establish a tax-favored retirement plan

If your business doesn’t already have a retirement plan, now might be a good time to take the plunge. Current retirement plan rules allow for significant tax-deductible contributions. For example, if you’re self-employed and set up a SEP-IRA, you can contribute up to 20% of your self-employment earnings, with a maximum contribution of $61,000 for […]

IRS updates vehicle tables

If your business buys or leases passenger vehicles in 2022, review the IRS’s recently updated depreciation deduction and income inclusion tables. In general, taxpayers may claim an additional first-year depreciation deduction equal to 100% if they place qualified purchased vehicles into service before 2023 (other rules and limitations apply). Table 1 lists depreciation limits for […]

Proposed legislation on the 1099-K

Under a new law, gig workers (such as rideshare drivers) and online sellers of goods must file Form 1099-K with the IRS if they earn at least $600 annually. A group of Democrats in Congress thinks that threshold is too low and may subject these taxpayers to “burdensome or confusing reporting requirements, which could result […]

When inheriting money, be aware of “income in respect of a decedent” issues

Once a relatively obscure concept, “income in respect of a decedent” (IRD) may create a surprising tax bill for those who inherit certain types of property, such as IRAs or other retirement plans. Fortunately, there may be ways to minimize or even eliminate the IRD tax bite. Basic rules For the most part, property you […]

Expansion of multilingual products

The IRS is taking additional steps to ensure that its forms and other documents are accessible to all taxpayers. The latest expansion of its multilingual products, Braille, text, audio and large print products are now available in Spanish. Specifically, the IRS is converting Form 1040 and its main schedules in Spanish Braille and large print. […]

Inspector General Reports

The Treasury Inspector General for Tax Administration (TIGTA) reports that unprocessed tax returns will continue to plague the IRS. “Inventory backlogs from the 2020 filing season continued to affect the IRS’s ability to provide timely service to taxpayers in the 2021 filing season,” TIGTA said. Auditors also examined the outcome of the IRS’s decision to […]

Going private

Recently, the news media has given a lot of attention to initial public offerings using special purpose acquisition companies (SPACs). But there’s another major transaction that’s gaining momentum amid the economic chaos caused by the COVID-19 pandemic: privatizations. Going private (also known as delisting) has many benefits, including: Reduced accounting, regulatory and governance costs, Fewer […]

2022 foreign housing exclusion issued

The IRS issues the 2022 foreign housing cost exclusions. A U.S. citizen or U.S. resident alien living abroad can elect to exclude the foreign earned income and housing cost amount from gross income (subject to limitations). The housing cost exclusion is calculated based on the number of days physically present in the foreign location. In […]

Numerous tax limits affecting businesses have increased for 2022

Many tax limits that affect businesses are annually indexed for inflation, and a number of them have increased for 2022. Here’s a rundown of those that may be important to you and your business. Social Security tax The amount of an employee’s earnings that is subject to Social Security tax is capped for 2022 at […]